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Western Refining Announces First Quarter 2013 Results

Western Refining Announces First Quarter 2013 Results

EL PASO, Texas, May 2, 2013 (GLOBE NEWSWIRE) -- Western Refining, Inc.
(NYSE:WNR) today reported first quarter 2013 net income, excluding special
items, of $98.8 million, or $0.94 per diluted share. This compares to first
quarter 2012 net income, excluding special items, of $85.1 million, or $0.81
per diluted share. Including special items, the Company recorded first quarter
2013 net income of $83.7 million, or $0.81 per diluted share, as compared to a
net loss of $53.5 million, or $0.60 per diluted share for the first quarter of
2012. Special items in the first quarter of 2013 were $23.8 million which
primarily consisted of $22.0 million in charges associated with the
extinguishment of debt. A reconciliation of reported earnings and description
of special items can be found in the accompanying financial tables.

Adjusted EBITDA was $242.7 million, a first quarter record, which compares to
an Adjusted EBITDA of $183.0 million for the first quarter of 2012. The
quarter-on-quarter improvement in both net income and Adjusted EBITDA was due
in large part to higher refining margins resulting from cost-advantaged crude
oils and strong product values in the Southwest U.S.

During the quarter, Western issued $350 million of 6.25% senior unsecured
notes and used the proceeds to pay off existing 11.25% senior secured notes.
The Company returned approximately $83 million in cash to shareholders through
a first quarter dividend and by share repurchases. Also in the quarter, the
Board of Directors authorized and directed Western management to explore the
formation of a traditional master limited partnership. In March, Western
completed a major turnaround of the north side of the El Paso refinery.

Jeff Stevens, Western's President and Chief Executive Officer, said, "Western
delivered another strong quarter as we continued to build on the momentum of
our outstanding 2012 financial performance. During the first quarter, we took
a number of steps that we believe will have a long-term positive impact for
the Company. Our ability to refinance our long-term debt, on an unsecured
basis and at a 6.25% rate, is a clear reflection of our balance sheet
improvements and the positive outlook the market has for Western. The
refinancing will result in approximately $15 million in annual interest
expense savings and will give us even more financial flexibility."

Stevens continued, "It has been a great start to the second quarter for
Western. In April, we amended and extended our revolver, resulting in lower
interest expense and greater financial flexibility. Our Board declared a
second quarter dividend of $0.12 per share and we continued to repurchase
shares of Western common stock as we remain committed to returning cash to our
shareholders. From the inception of our share repurchase program, through
April 26, 2013, we have purchased approximately 8.1 million shares at an
average cost of $29.56 per share. We have also begun operating the first phase
of our Delaware Basin gathering system which will give us access to additional
cost-advantaged shale crude oil in the Permian Basin."

Looking forward, Stevens said, "We established ambitious goals for 2013 and we
are well on our way to accomplishing them. We continue to invest in high
return capital projects while maintaining our commitment to return cash to
shareholders."

Conference Call Information

A conference call is scheduled for Thursday, May 2, 2013, at 11:00 a.m. EDT to
discuss Western's financial results. A slide presentation will be available
for reference during the conference call. The call, press release, and slide
presentation can be accessed on the Investor Relations section on Western's
website, www.wnr.com. The call can also be heard by dialing (866) 566-8590 or
(702) 224-9819, passcode: 30113227. The audio replay will be available two
hours after the end of the call through May 9, 2013, by dialing (800) 585-8367
or (404) 537-3406, passcode: 30113227.

Non-GAAP Financial Measures

In a number of places in the press release and related tables, we have
excluded the impact of the non-cash unrealized net gains and losses from our
commodity hedging activities for the periods ending March 31, 2013 and 2012,
and the loss on extinguishment of debt for the period ended March 31, 2013. We
believe it is useful for investors to understand our financial performance
excluding these special items so that investors can see the operating trends
underlying our business. Investors should not consider these non-GAAP measures
in isolation from, or as a substitute for, the financial information that we
report in accordance with GAAP.

About Western Refining

Western Refining, Inc. is an independent refining and marketing company
headquartered in El Paso, Texas. Western operates refineries in El Paso, and
Gallup, New Mexico. Western's asset portfolio also includes stand-alone
refined products terminals in Albuquerque and Bloomfield, New Mexico, asphalt
terminals in Albuquerque, El Paso, and Phoenix and Tucson, Arizona, retail
service stations and convenience stores in Arizona, Colorado, New Mexico, and
Texas, a fleet of crude oil and finished product truck transports, and
wholesale petroleum products operations in Arizona, California, Colorado,
Georgia, Maryland, Nevada, New Mexico, Texas, and Virginia. More information
about the Company is available at www.wnr.com.

Cautionary Statement on Forward-Looking Statements

This press release contains forward-looking statements covered by the safe
harbor provisions of the PSLRA. The forward-looking statements contained
herein include statements about our future: ability to increase our financial
flexibility; return of cash to shareholders; the formation, and potential
initial public offering, of a master limited partnership; future savings in
annual interest expense; our access to cost advantaged shale crude oil in the
Permian Basin; our investment in high return capital projects; our ability to
continue to deliver value to our shareholders; and our positioning for 2013.
These statements are subject to the general risks inherent in the Company's
business. These expectations may or may not be realized. Some of these
expectations may be based upon assumptions or judgments that prove to be
incorrect. In addition, Western's business and operations involve numerous
risks and uncertainties, many of which are beyond Western's control, which
could result in Western's expectations not being realized, or otherwise
materially affect Western's financial condition, results of operations, and
cash flows. Additional information relating to the uncertainties affecting
Western's business is contained in the Company's filings with the Securities
and Exchange Commission. The forward-looking statements are only as of the
date made, and Western does not undertake any obligation to (and expressly
disclaims any obligation to) update any forward looking statements to reflect
events or circumstances after the date such statements were made, or to
reflect the occurrence of unanticipated events.

Consolidated Financial Data

The following tables set forth our summary historical financial and operating
data for the periods indicated below:

                                        Three Months Ended
                                        March 31,
                                        2013               2012
                                        (In thousands, except per share data)
Statements of Operations Data                              
Net sales (1)                            $ 2,186,217        $ 2,339,212
Operating costs and expenses:                              
Cost of products sold (exclusive of      1,797,184          2,236,502
depreciation and amortization) (1)
Direct operating expenses (exclusive of  121,860            115,581
depreciation and amortization) (1)
Selling, general, and administrative     26,552             25,781
expenses
Gain on disposal of assets, net          —                  (1,891)
Maintenance turnaround expense           43,168             450
Depreciation and amortization            24,332             22,764
Total operating costs and expenses       2,013,096          2,399,187
Operating income (loss)                  173,121            (59,975)
Other income (expense):                                    
Interest income                          151                193
Interest expense and other financing     (17,988)           (24,122)
costs
Amortization of loan fees                (1,604             (1,807
Loss on extinguishment of debt           (22,047)           —
Other, net                               197                1,562
Income (loss) before income taxes        131,830            (84,149)
Provision for income taxes               (48,111)           30,645
Net income (loss)                        $ 83,719           $ (53,504)
Basic earnings(loss) per share          $ 0.96             $ (0.60)
Diluted earnings (loss) per share        0.81               (0.60)
Cash dividends declared per common share $ 0.12             $ 0.08
Weighted average basic shares            86,726             89,343
outstanding
Weighted average dilutive shares         109,097            89,343
outstanding (2)
Cash Flow Data                                             
Net cash provided by (used in):                            
Operating activities                     $ (35,633)         $ 42,843
Investing activities                     (261,423)          45,114
Financing activities                     91,454             (37,791)
Other Data                                                 
Adjusted EBITDA (3)                      $ 242,692          $ 182,983
Capital expenditures                     65,625             22,238
Balance Sheet Data (at end of period)                      
Cash and cash equivalents                $ 248,365          $ 220,955
Restricted cash                          —                  153,287
Working capital                          594,069            577,060
Total assets                             2,694,354          2,483,594
Total debt                               713,639            777,009
Shareholders' equity                     918,539            764,439

(1) Excludes $1,009.1million and $1,272.4million of intercompany sales;
$1,007.0million and $1,270.8million of intercompany cost of products sold;
and $2.1million and $1.6million of intercompany direct operating expenses
for the three months ended March31, 2013 and 2012, respectively. Cost of
products sold includes $28.8million and $1.7million in net realized and net
non-cash unrealized losses, respectively, from hedging activities for the
three months ended March31, 2013.

(2) Our computation of diluted earnings (loss) per share potentially includes
our Convertible Senior Unsecured Notes and our restricted shares and share
units. If determined to be dilutive to period earnings, these securities are
included in the denominator of our diluted earnings (loss) per share
calculation. For purposes of the diluted earnings (loss) per share
calculation, we assumed issuance of 0.2million restricted shares and share
units and assumed issuance of 22.1million shares related to the Convertible
Senior Unsecured Notes for the three months ended March31, 2013.

(3) Adjusted EBITDA represents earnings before interest expense and other
financing costs, amortization of loan fees, provision for income taxes,
depreciation, amortization, maintenance turnaround expense, and certain other
non-cash income and expense items. However, Adjusted EBITDA is not a
recognized measurement under United States generally accepted accounting
principles ("GAAP"). Our management believes that the presentation of Adjusted
EBITDA is useful to investors because it is frequently used by securities
analysts, investors, and other interested parties in the evaluation of
companies in our industry. In addition, our management believes that Adjusted
EBITDA is useful in evaluating our operating performance compared to that of
other companies in our industry because the calculation of Adjusted EBITDA
generally eliminates the effects of financings, income taxes, the accounting
effects of significant turnaround activities (that many of our competitors
capitalize and thereby exclude from their measures of EBITDA), and certain
non-cash charges that are items that may vary for different companies for
reasons unrelated to overall operating performance.

Adjusted EBITDA has limitations as an analytical tool, and you should not
consider it in isolation, or as a substitute for analysis of our results as
reported under GAAP. Some of these limitations are:

  *Adjusted EBITDA does not reflect our cash expenditures or future
    requirements for significant turnaround activities, capital expenditures,
    or contractual commitments;
  *Adjusted EBITDA does not reflect the interest expense or the cash
    requirements necessary to service interest or principal payments on our
    debt;
  *Adjusted EBITDA does not reflect changes in, or cash requirements for, our
    working capital needs; and
  *Adjusted EBITDA, as we calculate it, may differ from the Adjusted EBITDA
    calculations of other companies in our industry, thereby limiting its
    usefulness as a comparative measure.

Because of these limitations, Adjusted EBITDA should not be considered a
measure of discretionary cash available to us to invest in the growth of our
business. We compensate for these limitations by relying primarily on our GAAP
results and using Adjusted EBITDA only supplementally. The following table
reconciles net income (loss) to Adjusted EBITDA for the periods presented:

                                                 Three Months Ended
                                                 March 31,
                                                 2013     2012
                                                 (In thousands)
Net income (loss)                                 $83,719  $(53,504)
Interest expense and other financing costs        17,988   24,122
Provision for income taxes                        48,111   (30,645)
Amortization of loan fees                         1,604    1,807
Depreciation and amortization                     24,332   22,764
Maintenance turnaround expense                    43,168   450
Loss on extinguishment of debt                    22,047   —
Unrealized loss on commodity hedging transactions 1,723    217,989
Adjusted EBITDA                                   $242,692 $182,983

                                       
                                       
                                       
Refining Segment                       
                                       Three Months Ended
                                       March 31,
                                       2013                2012
                                       (In thousands, except per barrel data)
Statement of Operations Data:                              
Net sales (including intersegment       $1,776,086          $2,143,637
sales)
Operating costs and expenses:                              
Cost of products sold (exclusive of     1,442,152           2,093,545
depreciation and amortization) (1)
Direct operating expenses (exclusive of 81,875              75,109
depreciation and amortization)
Selling, general, and administrative    6,754               6,510
expenses
Gain on disposal of assets, net         —                   (1,382)
Maintenance turnaround expense          43,168              450
Depreciation and amortization           20,254              18,699
Total operating costs and expenses      1,594,203           2,192,931
Operating income (loss)                 $181,883            $(49,294)
Key Operating Statistics                                   
Total sales volume (bpd) (2)            160,633             186,291
Total refinery production (bpd)         120,712             142,841
Total refinery throughput (bpd) (3)     122,373             144,831
Per barrel of throughput:                                  
Refinery gross margin (1) (4)           $30.32              $3.80
Refinery gross margin excluding hedging $33.09              $21.48
activities (1) (4)
Gross profit (1) (4)                    28.48               2.38
Direct operating expenses (5)           7.43                5.70

The following tables set forth our summary refining throughput and production
data for the periods and refineries presented:

All Refineries (El Paso and Gallup)

                                    Three Months Ended
                                    March 31,
                                    2013                2012
Key Operating Statistics                                
Refinery product yields (bpd):                          
Gasoline                             67,613              74,815
Diesel and jet fuel                  45,040              59,303
Residuum                             4,083               4,327
Other                                3,976               4,396
Total refinery production (bpd)      120,712             142,841
Refinery throughput (bpd):                              
Sweet crude oil                      100,123             109,402
Sour crude oil                       21,368              22,543
Other feedstocks and blendstocks     882                 12,886
Total refinery throughput (bpd) (3)  122,373             144,831
                                    
El Paso Refinery                     

                                    Three Months Ended
                                    March 31,
                                    2013                2012
Key Operating Statistics                                
Refinery product yields (bpd):                          
Gasoline                             51,522              58,453
Diesel and jet fuel                  37,948              52,604
Residuum                             4,083               4,327
Other                                3,235               3,507
Total refinery production (bpd)      96,788              118,891
Refinery throughput (bpd):                              
Sweet crude oil                      77,068              87,829
Sour crude oil                       21,368              22,543
Other feedstocks and blendstocks     (490)               10,022
Total refinery throughput (bpd) (3)  97,946              120,394
Total sales volume (bpd) (2)         128,494             154,882
Per barrel of throughput:                               
Refinery gross margin (1) (4)        $34.57              $21.30
Direct operating expenses (5)        6.10                4.57
                                    
Gallup Refinery                      

                                    Three Months Ended
                                    March 31,
                                    2013                2012
Key Operating Statistics             
Refinery product yields (bpd):       
Gasoline                             16,091              16,362
Diesel and jet fuel                  7,092               6,699
Other                                741                 889
Total refinery production (bpd)      23,924              23,950
Refinery throughput (bpd):           
Sweet crude oil                      23,055              21,573
Other feedstocks and blendstocks     1,372               2,864
Total refinery throughput (bpd) (3)  24,427              24,437
Total sales volume (bpd) (2)         32,139              31,346
Per barrel of throughput:            
Refinery gross margin (1) (4)        $26.77              $21.54
Direct operating expenses (5)        10.07               8.56

(1)Cost of products sold for the combined refining segment includes the net
realized and net non-cash unrealized hedging activity shown in the table
below. The hedging gains and losses are also included in the combined gross
profit and refinery gross margin but are not included in those measures for
the individual refineries.
                                    
                                    Three Months Ended
                                    March 31,
                                    2013                2012
                                    (In thousands)
Realized hedging loss, net           $(28,819)           $(14,962)
Unrealized hedging loss, net         (1,723)             (217,989)
Total hedging loss, net              $(30,542)           $(232,951)

(2)Sales volume includes sales of refined products sourced primarily from
our refinery production as well as refined products purchased from third
parties. We purchase additional refined products from third parties to
supplement supply to our customers. These products are similar to the
products that we currently manufacture and represented 17.8% of our total
consolidated sales volumes for the three months ended March31, 2013,
respectively. The majority of the purchased refined products are distributed
through our wholesale refined product sales activities in the Mid-Atlantic
region where we satisfy our refined product customer sales requirements
through a third-party supply agreement.

(3)Total refinery throughput includes crude oil and other feedstocks and
blendstocks.

(4)Refinery gross margin is a per barrel measurement calculated by dividing
the difference between net sales and cost of products sold by our
refineries' total throughput volumes for the respective periods presented.
Net realized and net non-cash unrealized economic hedging gains and losses
included in the combined refining segment gross margin are not allocated to
the individual refineries. Cost of products sold does not include any
depreciation or amortization. Refinery gross margin is a non-GAAP
performance measure that we believe is important to investors in evaluating
our refinery performance as a general indication of the amount above our
cost of products that we are able to sell refined products. Each of the
components used in this calculation (net sales and cost of products sold)
can be reconciled directly to our statement of operations. Our calculation
of refinery gross margin may differ from similar calculations of other
companies in our industry, thereby limiting its usefulness as a comparative
measure.

The following table reconciles combined gross profit for all refineries to
combined gross margin for all refineries for the periods presented:

                                   Three Months Ended
                                   March 31,
                                   2013                  2012
                                   (In thousands, except per barrel data)
Net sales (including intersegment   $1,776,086            $2,143,637
sales)
Cost of products sold (exclusive of 1,442,152             2,093,545
depreciation and amortization)
Depreciation and amortization       20,254                18,699
Gross profit                        313,680               31,393
Plus depreciation and amortization  20,254                18,699
Refinery gross margin               $333,934              $50,092
Refinery gross margin per refinery  $30.32                $3.80
throughput barrel
Gross profit per refinery           $28.48                $2.38
throughput barrel

(5)Refinery direct operating expenses per throughput barrel is calculated by
dividing direct operating expenses by total throughput volumes for the
respective periods presented. Direct operating expenses do not include any
depreciation or amortization.


                                   
                                   
Wholesale Segment                   
                                   Three Months Ended
                                   March 31,
                                   2013                   2012
                                   (In thousands, except per gallon data)
Statement of Operations Data                              
Net sales (including intersegment   $1,133,717             $1,192,064
sales)
Operating costs and expenses:                             
Cost of products sold (exclusive of 1,105,024              1,166,531
depreciation and amortization)
Direct operating expenses
(exclusive of depreciation and      16,064                 18,322
amortization)
Selling, general, and               2,905                  2,315
administrative expenses
Gain on disposal of assets, net     —                      (509)
Depreciation and amortization       965                    954
Total operating costs and expenses  1,124,958              1,187,613
Operating income                    $8,759                 $4,451
Operating Data                                            
Fuel gallons sold                   355,633                367,228
Fuel gallons sold to retail         61,428                 56,704
Average fuel sales price per gallon $3.31                  $3.37
Average fuel cost per gallon        3.24                   3.32
Fuel margin per gallon (1)          0.08                   0.06
                                                         
Lubricant gallons sold              2,900                  2,854
Average lubricant sales price per   $11.00                 $11.12
gallon
Average lubricant cost per gallon   9.91                   10.02
Lubricant margin (2)                9.9%                   9.9%
                                                         
Realized hedging loss               $—                     $(20,797)
Unrealized hedging loss             —                      —
                                   
                                   Three Months Ended
                                   March 31,
                                   2013                   2012
                                   (In thousands, except per gallon data)
Net Sales                                                 
Fuel sales                          $1,176,037             $1,238,390
Excise taxes included in fuel sales (83,237)               (87,243)
Lubricant sales                     31,893                 31,726
Other sales                         9,024                  9,191
Net sales                           $1,133,717             $1,192,064
Cost of Products Sold                                     
Fuel cost of products sold          $1,153,357             $1,220,695
Excise taxes included in fuel cost  (83,237)               (87,243)
of products sold
Lubricant cost of products sold     28,743                 28,599
Other cost of products sold         6,161                  4,480
Cost of products sold               $1,105,024             $1,166,531
Fuel margin per gallon (1)          $0.08                  $0.06

(1)Wholesale fuel margin per gallon is a function of the difference between
wholesale fuel sales and cost of fuel sales divided by the number of total
gallons sold less gallons sold to our retail segment. Fuel margin per gallon
is a measure frequently used in the petroleum products wholesale industry to
measure operating results related to fuel sales.

(2)Lubricant margin is a measurement calculated by dividing the difference
between lubricant sales and lubricant cost of products sold by lubricant
sales. Lubricant margin is a measure frequently used in the petroleum products
wholesale industry to measure operating results related to lubricant sales.

                                   
                                   
Retail Segment                      
                                   Three Months Ended
                                   March 31,
                                   2013                  2012
                                   (In thousands, except per gallon data)
Statement of Operations Data                             
Net sales (including intersegment   $285,553              $275,913
sales)
Operating costs and expenses:                            
Cost of products sold (exclusive of 257,014               247,252
depreciation and amortization)
Direct operating expenses
(exclusive of depreciation and      26,054                23,726
amortization)
Selling, general, and               1,967                 1,940
administrative expenses
Depreciation and amortization       2,672                 2,517
Total operating costs and expenses  287,707               275,435
Operating income (loss)             $(2,154)              $478
Operating Data                                           
Fuel gallons sold                   72,882                67,572
Average fuel sales price per gallon $3.38                 $3.49
Average fuel cost per gallon        3.24                  3.33
Fuel margin per gallon (1)          0.14                  0.16
                                                        
Merchandise sales                   $57,826               $56,539
Merchandise margin (2)              28.3%                 28.4%
Operating retail outlets at period  222                   210
end
                                   
                                   Three Months Ended
                                   March 31,
                                   2013                  2012
                                   (In thousands, except per gallon data)
Net Sales                                                
Fuel sales                          $246,098              $235,605
Excise taxes included in fuel sales (28,623)              (26,489)
Merchandise sales                   57,826                56,539
Other sales                         10,252                10,258
Net sales                           $285,553              $275,913
Cost of Products Sold                                    
Fuel cost of products sold          $236,125              $225,048
Excise taxes included in fuel cost  (28,623)              (26,489)
of products sold
Merchandise cost of products sold   41,457                40,484
Other cost of products sold         8,055                 8,209
Cost of products sold               $257,014              $247,252
Fuel margin per gallon (1)          $0.14                 $0.16

(1)Fuel margin per gallon is a measurement calculated by dividing the
difference between fuel sales and cost of fuel sales for our retail segment by
the number of gallons sold. Fuel margin per gallon is a measure frequently
used in the convenience store industry to measure operating results related to
fuel sales.

(2)Merchandise margin is a measurement calculated by dividing the difference
between merchandise sales and merchandise cost of products sold by merchandise
sales. Merchandise margin is a measure frequently used in the convenience
store industry to measure operating results related to merchandise sales.


Reconciliation of Special Items

We present certain additional financial measures below and elsewhere in this
press release that are non-GAAP measures within the meaning of Regulation G
under the Securities Exchange Act of 1934.

We present these non-GAAP measures to provide investors with additional
information to analyze our performance from period to period. We believe it is
useful for investors to understand our financial performance excluding these
special items so that investors can see the operating trends underlying our
business. Investors should not consider these non-GAAP measures in isolation
from, or as a substitute for, the financial information that we report in
accordance with GAAP. These non-GAAP measures reflect subjective
determinations by management, and may differ from similarly titled non-GAAP
measures presented by other companies.

                                        Three Months Ended
                                        March 31,
                                        2013               2012
                                        (In thousands, except per share data)
Reported diluted earnings (loss) per     $0.81              $(0.60)
share
Income (loss) before income taxes        $131,830           $(84,149)
Unrealized loss on commodity hedging     1,723              217,989
transactions
Loss on extinguishment of debt           22,047             —
Earnings before income taxes excluding   155,600            133,840
special items
Recomputed income taxes after special    (56,778)           (48,718)
items
Net income excluding special items       $98,822            $85,122
Diluted earnings per share excluding     $0.94              $0.81
special items

CONTACT: Investor and Analyst Contact:
         Jeffrey S. Beyersdorfer
         (602) 286-1530
        
         Media Contact:
         Gary W. Hanson
         (602) 286-1777

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